Why does everybody want to average down
If you buy a stock, you should pray for its price to go up, even if it means average up. No?

your 'not correctly value' most probably is just a personal perception. One is stock and another is a trust fund, totally different tools and for totally different purposes. even SUNREIT 'stock' is different than the REIT 'biz' itself, one is subject to millions investors perceptions and another is just serving thousands 'buyers'

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Added on July 22, 2012, 10:04 amboth strategies are applied in different situation ...

in short, if you 'think' a stock will go up in long term but currently goes down in short term, u avg down.

however, avg down is VERY DIFFERENT than CHASING DOWN, which is one of the biggest mistakes what most traders didn't differentiate.

the key difference is one buy down base on feeling, another has a pre-defined avg down 'gap' to follow - an avg down strategy.

avg down strategy also comes with a closer stop loss alert, caused you basically is increasing your risk for the higher return/lower lost ratio.

This post has been edited by mtsen: Jul 22 2012, 10:04 AM

why i need to average down?

see my skpetro also know that i am the stupid fool that buy at rm2.30 after 5 min when it start listed

if i average down, my buy price will be lower already...

This post has been edited by john123x: Jul 22 2012, 10:15 AM

The term undervalue if such a seduction. By definition it's selling less what than the 'deem value' but what about the other definition? Undervalue also means the stock is selling cheap because not much ppl wants to invest/trade/goreng/srew/buy/chiak/whack/punt the stock. Some reasons. One, these ppl do not understand the concept of value. The other one is perhaps there lies many risks in the stock that these ppl are willing to forgo whatever potential/value in the stock. Maybe there is much truth in the e cavaet that says not all cheap stuff are good.
Why investor invest REIT? Are they really investor? Or are they merely PUNT investor? Do they really understand the concept behind REITs? Do they know how these REIT make their profits? Wish I know! I cannot even understand why REITS revalue their properties so often! Capitamall revalues its properties twice a year! Are they really investing? Or are they punting after the so-called dividends?
UOADEV? Is there something really wrong with the company? If there's nothing wrong the market is silly. But what if there is a solid reason why they don't want to invest in such a stock.

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Added on July 22, 2012, 11:31 amDoes attractive dividends from REITS make the investment a sustainable long term investment? Where does the money from the dividends come from?

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Added on July 22, 2012, 11:32 amNobody believes they can make a mistake, as such, buying more when the stock falls make it a good investment.

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Added on July 22, 2012, 11:35 amavg down is VERY DIFFERENT than CHASING DOWN?
What so different? No matter how you call it, you end up buying more of the same stuff at a cheaper price.
Instead, why not ask, why the same stuff got so much cheaper?
Is the market really nice to us? Or did we buy the wrong stock?

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Added on July 22, 2012, 11:45 amDo traders even average down?

This post has been edited by Boon3: Jul 22 2012, 11:45 AM

traders=dont avg down they cut lost and buy back lower
investor=avg down when they see the value in a stock's future

so traders who avg down are investors

Not correct valued based on what criteria?

It is not about liquidity, reit liquidity can be poorer than property stock.
It is about yield that investors can get.

Nowadays, investors in stock market start to realise, a company can make billions or trillions of profit, but if the company give zero or little dividend, investors may not like it too much.
You can see the profit, but cannot touch and own the profit.

It makes little difference for minority shareholders. You hold 1000 shares, the company make tons of profit, and no dividend, yes, value of company increase aka your 1000 shares worth more due to earning ability, and high probably share price rise too,
but you do not get any positive cashflow from it, unless you sell off the share to register the gain.

Investors nowadays is more realistic, and back to more basic fundamental of investing a share.
What's for investing a share in a company?
To get a piece of profit that company make.

So investors nowadays are more keen how much yield one can get.
So if look at dividend yield pov, those properties stocks yield is about comparable with reit.

NAV is only a primary factor, if those NAV value can be realised, and given back to investors, if not, whatever high value NAV, the stock remains good worth but not realised.

Reit model is simple, they don't involve in business dealing, they just own the property and rent it out. So business risk is lesser than ordinary company, as long as able to get tenant, and tenants pay up the rent, then reit can make a profit and investors get paid.

It is like owning property and rent it out.
As compared ordinary property stocks that build houses and sell it to make a profit.

So the risk involved is different.

Also reit has tax advantage compared to ordinary company. Ordinary dividend from comopany especially single tier, it is already being taxed at flat rate of 25%, while reit is only subjected to 10% witholding tax.

Good one.

traders=dont avg down they cut lost and buy back lower

All traders like this meh? Some traders do not insist on trading back on the same stock. Why the need to trade back the same stock? Is it an ego issue? Does all traders find the urge to make money back the same way they lost it? Stock that trades lower, does not necessary mean a trading opportunity. Sometimes these stocks can trade even much lower.

investor=avg down when they see the value in a stock's future
Investors here don't seem to buy the wrong stock. Investors here don't seem to have to have wrong judgement on a stock's future. Terror lah.

Traders that avg down are investors?

actually, min brokerage, dollar cost averaging and dividend reinvestment is deeply related.

if min brokerage is abolished, dividend received can easily be reinvested to enjoy a true 0.42% brokerage, and will improve dollar cost averaging.


currently, i must collect 6-7 dividend payments to fit inside the rm2.5k block to enjoy cheap brokerage....

This post has been edited by john123x: Jul 22 2012, 03:19 PM

No business dealing? Just own property and rent it out?

Are you sure?

just some comments:

before u can own it, u must buy it.. to buy it, is a business transaction.

just like amfirst, rights issue to fund for property purchase.....

The basic of reit model.

The business issue for reit is about getting tenants, and make the property appealing to be rent or lease aka a management issue.
or
Buying new property to generate more income through rental.

Reit income come from rental, car park income etc aka that come from the property leasing etc.

They don't buy a land then build property and sell property like developer or property stock company aka like ordinary company make business.

Sorry I'm not a investor and I do not have interest in REITS. Hope you can excuse me.

I was just commenting on what cherroy said. 'Reit model is simple, they don't involve in business dealing, they just own the property and rent it out'.
You have pointed out that reit like amfirst is doing a RIGHTS issue to fund for NEW property purchase...
Btw. why do REITS like CapitaMall revalue their properties twice a year? I have no idea why.

correction....
cut lost buy back lower is alot better thn avging down....provided theres an opportunity...
this is better im too used to talking with fellow trader so i make an assumption everyone understand

if gt chance buy back lower lor.....if no chance find other boats....
like cybert i make some losses at 60c level.....but i earn tons at 30c level....not ego issue is call if opportunity knocks we go in lor....
if i keep losing at the same stock even got opp i will avoid it cos it dun suit my trading style

and by trader i mean super short term traders as in day traders those who buy and sell in the matter of min and even secs

Eh? All traders like this also meh? Why handicap ownself by trading within a time frame? Time frames should be a friend and not a handicap.

I see. Now I guess reit is not as simple as what you said earlier, ie 'they don't involve in business dealing, they just own the property and rent it out '. Thanks for clarifying for others.

nt all
diff ppl got diff way of making money

perhaps u have huge cap and not limited by time frame? ;0
what abt people who have only say 5k trading cap....but want to make say few hundred daily...can they afford to invest and wait? and people who have no holding power and cannot afford to burn the 5k?

we all have diff ways...at the end of the day its abt bringing home some fresh cash frm bursa

some old trades i found....ppl who trade with limited cap trade like this lor....cant afford to let the cap stuck in coma/stocks that are not moving



This post has been edited by phoenix87: Jul 22 2012, 04:12 PM

cut lost + buy back = 2 transactions
avg down = 1 transaction

this makes a difference especially for those 3-5k cap folks who cares about transaction cost.

as mentioned earlier, avg down is when u think its just a temporary adjustment. u cut lost when u think ur earlier decision is totally wrong and now there is a reversal.

I oso cut lost most of the time coz when i buy a stock, its usually already 'worth' buying. so when it doesn't perform and break the support, I run and never look back. Buy back is a whole new cycle that is irrelevant to my previous cut lost.

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Added on July 22, 2012, 6:05 pmon the other hand, REIT is regulated under "interest scheme" by SSM, not SC. (long story on this but in short, huge difference accounts wise and therefore accountability wise as well !? )

The biggest portion cost goes to trust and management fee. As long as the management team is great, then its ok. but when this management team has enough capital on its own, why should they keep serving you ( they earn mgmt fee only) and not turn this into a private trust ( they earn all profit ) ? whatever their answers are ( good or bad intention ), its not a healthy model in long run.

Seeing UOADEV, YTL, BJC as 'troubles' is NOT the only way to interpret today's market. They may be the trend reversal stocks. So while you are laughing with your bulling choices, keep an eye on the reversal stocks. Eventually when you profit take, you know where to put them into.

reversal stock choice is particularly interesting in today's market ... we can trade all time round despite market condition.

This post has been edited by mtsen: Jul 22 2012, 06:05 PM

ecm provide no min cost for brokerage.....
cimb provide rm8.88 flat rate....
people with small cap have to find ways to survive to play like this

cut lost and buy back applies when there is a reversal....of cos u wont buy again when the stock down trend rite? who in their right mind will do that?

that was a sub-thread about avg down vs buy back. not cut lost vs buy back.

i believe it goes back to EPF account